Postal officials said 100,000 job cuts would come from attrition. For the remaining 120,000 career positions, the agency will ask Congress to eliminate layoff protections in collective bargaining agreements.

The proposal does not sit well with labor unions.

"The [American Postal Workers Union (APWU)] will vehemently oppose any attempt to destroy the collective bargaining rights of postal employees or tamper with our recently-negotiated contract - whether by postal management or members of Congress," APWU President Cliff Guffey said. "Crushing postal workers and slashing service will not solve the Postal Service's financial crisis."

In its 2010 annual report, the post office said it had 583,908 career employees. The job-cutting plan would affect career positions in all areas of expertise and function.

The agency also proposes to pull out of the Federal Employees Health Benefits program (FEHB), hoping to create and manage a separate health care plan.

"The Postal Service does not believe that FEHB meets the private sector comparability standard, nor does it adequately address the Postal Service's unique demographic and program needs across its offering of some 200 plans," agency leaders said in a white paper. "A legislative change that allows the Postal Service to establish its own health benefits program would allow the Postal Service to fully incorporate private sector best practices, saving money while also providing comparable benefits to employees."

USPS leaders have said the agency faces insolvency in September, warning they will be unable to make a congressionally required $5.5 billion payment to cover future employee health care costs due Sept. 30. By then, the agency will have reached its borrowing limit and simply won't have the cash make the payment.

"While we will continue to study the details of the Postal Service's new proposals for administering its own retirement and health care plans, we are deeply apprehensive about their validity and their impact upon our members," National Association of Postal Supervisors President President Louis Atkins said. "We continue to urge Congress to realign the prefunding schedule when it returns, before the Postal Service on September 30 must pay another costly $5.5 billion for future needs that will not arise for decades."

Postal officials have sought congressional assistance repeatedly over the last few years, including requests to change the way USPS funds its employee health and retirement systems. But none has been acted on.

"I am open to considering any idea that can prevent the Postal Service from going bankrupt," said Sen. Tom Carper (D-Del.), chairman of the Senate subcommittee with jurisdiction over USPS. "I am waiting to get the details on these two most recent proposals before determining whether or not I will support them."

Earlier this year, Carper introduced a bill that would return money the Postal Service said it has overpaid into federal health and retirement programs. Rep. Darrell Issa (R-Calif.) sponsored a separate measure that that would create a solvency board responsible for restructuring USPS, if it becomes insolvent.